Posted
by
Zonkon Thursday September 13, 2007 @12:43PM
from the all-about-the-isk dept.

Earlier this month Dr. Eyjólfur "Eyjo" Guðmundsson, the newly hired EVE Online economist, released his first market report looking at the mining and trade of minerals within CCP's massively multiplayer online game. I had a chance to speak to Dr. Guðmundsson at GDC Austin, to further understand why it is that an online game needs an econ professor on staff. We discussed his work on the mineral information, future plans, the reality of trust in an inherently hostile world and why that makes for a bad banking environment, and a few words on player communication from CCP CEO Hilmar Petursson. Read on for the full interview.

Slashdot: Just so we can understand a little bit of the background here, how did you get hooked up with the CCP folks, and what is your interest in EVE Online?

Dr. Guðmundsson: Originally I was hooked up with the CCP group through a conference on experimental economics where we were looking at how to use experiments on how to improve natural resource management. What does that have to do with CCP? They showed up at the conference, and introduced the game to researchers as a potential platform for testing and tracking social trend. I fell for the concept. What I fell for was the single server concept. Everyone in the game world is participating in the same experience. As the game grows the complexity and the fun of it grows exponentially. You can actually see shortages of goods, scarcities of goods in the game world. If you want some material, you need to take steps to go out and get it; you can mine it, you can refine it, but there is a time element involved in obtaining it. There's an element of effort involved. You can also lose things, if you make poor decisions, if you go into an area where you can't defend yourself you can actually lose what you've been building. All of these components are build into the world, and when you make decisions in the game you're making many of the same decisions you make in your daily life. It looked to me like a perfect world to do research on.

Slashdot: I know your first blog report was on mineral prices; what other areas of the economy are you finding interesting? What elements of the economy are we likely to see written up in the future?

Dr. Guðmundsson: Well, the whole macroeconomics of EVE are very interesting. Trying to figure out inflation, trying to figure out the monetary supply, trying to figure out the overall trade patterns ... all of these macroeconomic trends are of interest and we'll be working on those over the next few months. I also find it interesting to look at these resources, to think about how corporations and alliances are run. We can see how different corporate cultures have helped in obtaining different goods.

Slashdot: In previous interviews you've spoken of economics as a source of entertainment. I'm wondering why you see people viewing economic information as amusement. Isn't this kind of dry stuff?

Dr. Guðmundsson: I think it's entertainment for people because it helps to put things into context, and it helps to put yourself in a place within that context. You can identify where you are economically. You need the information to make decisions about your own life, but you also want to know things on a broader scale. "Oh, this guy or that guy gained a billion dollars on the stock market, or he lost a billion dollars on the stock market." It's just news, and we can say that it will interest people who are generally curious, and also for personal gain.

Dr. Guðmundsson: We'll be doing quarterly reports, and we'll have annual synopsis. The first report is due out before fanfest, by late October. Fan Fest is in early November. That one will focus on the macro environment, try to set the stage for future computations. We see it happening that way; in the first one we give sort of general indicators, and in the ones to follow we update the information that we have and we imagine it has the potential to grow quite a bit over time.

Slashdot: Obviously you can't go into details, but are there already any surprising trends that you've found in your research? Anything you weren't expecting?

Dr. Guðmundsson: Well what I've been looking at in terms of the mineral market, what has been really interesting to see, is how efficient the market is at disseminating information. If something happens in the game you see in the market numbers very soon. We do not participate in that market, it's a completely player-driven market. That makes it even more interesting, to see how effective and efficient a market it is. It has all the same laws that any market has in real life. From what I've seen so far, I find it very interesting to see how effective the market is, and I'm looking forward to seeing how other markets compare to this one.

Slashdot: This may be a good question to include Hilmar in. What is it about EVE that makes those communications so efficient, that allows market information to travel as quickly as it does?

Hilmar Petursson: I would say there is a fundamental difference to the EVE economy, something you don't see in the economies of other games. People are making purchase decisions in a matter of life-and-death environment. You are trying to outsmart your competitor by making an informed logistics and market-based decision, and the more data you have the more efficient your decision-making is. Currently we have offered price trends for items, as well as volume and those sorts of statistics, people have been using this to make purchase decisions on items. As the economy has grown larger, though, there is more of a need for macro-level understanding of economic data. Just as when you have a relatively small country, you can get by with having the market provide the microeconomic data, when the scale increases you need to see the macroeconomic data so that people can see the overarching trends. Consumer confidence, interest rates, money supply, these factors become more and more important as EVE Online grows and the market becomes more efficient.

That's really what the game stands on, the whole thing is tied together by the market system. We have various disconnected systems like mining, manufacturing, corporations, and combat, but they all tie in at the bottom with the market system. We initially spent a lot of time when the game was first made, making sure that we had an abstract, efficient, accurate market system. We made many difficult decisions where we sacrificed 'correctness' for simplicity or ease of use. It is a fairly complex thing, but it has allowed us to evolve the game quite rapidly up to this point. That said, we have been seeing more and more of a need to get professional insight into what is happening on the macro level. We've seen immediately how responsive the player base is to it. They've been looking for these kinds of insights for some time now.

Dr. Guðmundsson: I would like to add that the fact that the information is distributed so quickly makes it a great model for other market systems. You have smart players trying to outsmart each other, which sort of means that as soon as information is available someone is using it to try to gain the upper hand. We can say it's also due to the smart play styles of the playerbase.

Slashdot: Has the response been fairly favorable to the first report?

Dr. Guðmundsson: It has been most favorable. Many people have thanked us, and like to see the trend data that we have. I think most of the players would like to see more in-depth analysis, and I think that's going to be the most beneficial work we can do. The only thing is, it will take time before we can provide them with the kind of analysis we'd like to see. Then there are all the people who would like to get advice about what they specifically should do. As with any other economic advice, though, if I knew what a specific player should do I would know everything. This isn't that kind of advice. This is for people to make their own smart decisions about what to do. We can't tell people what they should do, but we can say what happened and why it happened.

Slashdot: I have read that other research groups have an interest in the game along these lines, and I was wondering if you've had any contact with other groups about studying EVE for other subjects. If you have, what areas of study will these groups be looking into?

Dr. Guðmundsson: I think generally there's a number of academic groups interested in research inside of gaming worlds. I think this is a very new phenomenon, but the potential for research in many fields is very great. People have talked on the web about looking into EVE from political, sociological perspectives, science research, looking at the democratic elements of the game ... it all boils down to the point that within the game world, because of its design, people are behaving in a way that is interesting to the world we live in. Research done there could be used to better understand how people behave in the real world, within certain environments.

Slashdot: Earlier you spoke of how PvP is a driving force in the economy because of the requirement to make smart decisions, and the drain on resources from combat. What are some other effects on the game's economy that result from phenomenon?

Dr. Guðmundsson: Well, PvP is essentially the way that resources are consumed in EVE. In order to operate a fleet, to outsmart your opponent, you need a lot of resources. In order to get these resources you get them in the most intelligent, efficient way possible. You need to get people to mine for you, you need people to make the right weapons for you, in as short a period of time in the right quantities. Specialization among the players is almost a requirement in order to get the best use out of time and resources in games. We have whole corporations in game that focus on mining and shipping, and there are individual traders who think they know what demand will be for in the near future; they do arbitrage trading all over Alliance space to the alliances and corporations.

Slashdot: Another element you've spoken on previously is the lack of trust players have with each other, and the problems that presents when trying to form something like a bank. What's your opinion of setting up a trusted bank from the CCP side?

Dr. Guðmundsson: From my perspective a CCP-run bank doesn't really matter; what really matters is what does the playerbase think. What kind of services do they want? We see players trying to fulfill those services, within a limited framework in terms of the trust. Because they're doing it, there's obviously an interest there. If we were to do it we'd have to examine how to go about that the right way. That's really how the banking system was established in our world, and that took a couple hundred years to develop before we had a system people could trust. What we need to do is come up with a system that's supportive of gameplay, that can survive the problems of many users.

Slashdot: Since you began examining the economy, have there been any issues or problems you've discovered in the marketplace?

Dr. Guðmundsson: At this point we haven't come across any issues that are serious problems for the gameplay. As I said before, we want to have hands off on the economy as much as we can. When we look at the issues that are potential problems, any treatment we would do is very very slow, and very very light. Up to this time, since I've been with the company, there have been no issues that really impacted the gameplay. The market is incredibly player-driven. It's an incredible state of affairs to see.

Slashdot: Looking at the different styles of gameplay (trading, mining, PvP), which is most efficient in economic terms?

Dr. Guðmundsson: Well, you can never really say beforehand which type of playstyle is more profitable, because it changes all the time. In order for you to understand which is most profitable you'd have to make your own predictions as to what is going to happen in the future. Profitability of a certain industry is based on expectations of future performance. If you knew that there is an upcoming war between Alliances in a certain area of the galaxy, that would tell you that it would be profitable to become a trader in that sector for the near future. If they are in need of a lot of supplies for a short period of time, that will put a squeeze on resources in that particular area. Then you'd have to follow what's going on and keep track of what's happening on the internet very closely.

Slashdot: Do you have much of an interest in actually playing the game, or is the research side of things mostly what interests you? What is your preferred style of play?

Dr. Guðmundsson: Oh absolutely. By necessity I will always take a low profile, try to just understand the gameplay as much as I can. I greatly enjoy talking to people about the game a lot, listening to peoples experiences about how they perceive the game is quite interesting. We talk a lot about the gameplay at CCP too, of course, long into the night. It's sometimes said that in Iceland there are 300,000 people, and there are 300,001 opinions. From our EVE community of 200,000 people, it certainly seems like there are 200,001 opinions on exactly what is happening. That's really fun to be able to interact with.

Basically I'm just trying to understand all aspects of the game, but of course I find the trade and marketing aspects of the game most interesting. It's also fun to go out there and shoot at somebody, of course.

Slashdot: Is there anything in specific about your research that you'd like to share with EVE players?

Dr. Guðmundsson: Generally speaking I'd like to get the message to our playerbase that I really enjoy all comments that have been put forward. I come from an academic community, and criticism is really the driving energy behind doing something new. So, I'd say just let the comments flow. Let me know what you like and dislike about the research, what you'd like me to do in the future. We are still in the early stages of understanding the economy, though, so over the next couple of months we will be putting forward mostly historical information to set the stage for future projects. I really like them though; please keep them coming.

[It's sometimes said that in Iceland there are 300,000 people, and there are 300,001 opinions. From our EVE community of 200,000 people, it certainly seems like there are 200,001 opinions on exactly what is happening.]

And on Slashdot, there are 999,999,999 opinions that seem like 1,000,000,000 but all only under one user.

Can anyone tell me whether he really said anything? I couldn't spot it.

"Overall trade quantity and volume has increased dramatically over the last 3 years and the price of minerals has fallen considerably due to increased mining efficiency through better tactics and improved technology"

I could get a program to pump out that stuff based on the stats. In fact I've seen such auto-generated drivel in some investment sites for stocks that no human is monitoring -profits have gone up due to management actions leading to increase in revenues and reduction in costs blahblahblah.

The thing is that you are looking at the compiled data. Ordinary players have no way to gather all that information by themselves. Now that the graphs are published, most conclusions are obvious indeed.

That was the primary criticism he received about his data presentation. Everything he said, we already knew. Those who engaged in such trade had, for quite some time, been compiling their own data and making their own graphs. And that was without direct database access.It was shiny, but it wasn't anything new or exciting (or at least exciting to the right people). Hopefully, his quarterly or annual report will be more beneficial. People had several requests in the forum thread for what they'd like to see hi

What I fell for was the single server concept. Everyone in the game world is participating in the same experience.

Uhm, wouldn't a multiple-server environment actually be more useful as far as science was concerned? For things like control groups and stuff? We have a "single server concept" in the real world. IMHO, that's why Economics is regarded by some as little more than fortune-telling, because you can hardly isolate a single variable and experiment on it in the real world. If there are multiple well-populated but otherwise identical servers representing the game, you could trivially and with mathematical precision change a certain variable on one server and actually draw conclusions from the developing differences (or lack thereof) with regard to other, unmodified servers that run in parallel.

Uhm, wouldn't a multiple-server environment actually be more useful as far as science was concerned? For things like control groups and stuff?

It could. But looking at a game I'm familiar with (EQ), the price of platinum and items in-game is about constant across the board. Notable exception being (1) the PvP server and (2) the 'combine' server [which is a server that opened not long ago, starting with the first expansion. New expansions are unlocked as milestones are met. They are about 3/4 of the way th

We can learn something from EVE's single-server system because it started from scratch...something that macroeconomics in the real world can't simulate. It's practically a true free-market economy with pure free-market hindrances (such as goldfarming) without the corruption/influence of past or failed economic styles (such as communism or mercantilism unless they develop in-game somehow).

It would be genius if more of it wasn't fake.My main disagreements with treating Eve Online's economy in such high regard is the level of 'fake-ness' imparted on it by forces that do not, and can not, exist in the real world.

For example, there are taxes in eve; yet, unlike the real world, this 'money' goes nowhere. It's just taken out of the system.

Another would be that the magical supply-demand economy isn't really 100% player driven. The demand-side is, of course, but the game is just about as fake as W

Actually, no. Because people have nowhere to escape if economy goes bonkers.If you have multiple servers, and people want to play, they can jump ship if the economy on their server goes bananas, be it because of farmers, because of mob monopolizing or because of guilds undercutting prices to the point where they can easily monopolize the market. Now, while all those problems are hard to achive in EvE due to its size, the problems exist.

EvE did have a farming problem not too long ago. Prices plummeted and li

Yeah, I'd say that's probably the most important way that EVE simulates a real economy: things enter and leave the system through use and destruction. The only thing it's missing is truly limited resources (not just limited for the week/day/hour/minute).

There's also the fact that you simply cannot get the more valuable ores in high sec, and you can't profitably macro-mine in low sec. Those valuable ores are required to make most of the stuff in Eve, so it has to be mined...but significant resources have to be invested in defense and cooperation (via corporations and alliances) to get it done profitably. There's also the point that a player can generate large amounts of money - comparable to low-sec mining to some extent - by doing high-end missions in hi

There's pluses and minuses to both methods. Multiple servers allow you to test in the ways that you mentioned, but having just one game universe makes it more "real" in some ways. Basically the players are stuck with that one model, much like the real world is stuck with the one global economy. Plus you'll get some long term growth data that you wouldn't get otherwise. If another 20k people join, instead of putting them all off on their own server with its own economy, you see the effects they have on an al

Well, single servers with varying rates of intra-server communication should be nearly identical to multiple servers with varying rates of inter-server communication, except the modeling will be much more complex on the multiple servers. If you're unsure if the tools you are using are even going to work at all, of course you are going to want to validate them against the simpler case.

Anyone can produce graphs, but what do you produce graphs OF? If there are N variables in the system, you can produce N(N+1

IMHO, that's why Economics is regarded by some as little more than fortune-telling, because you can hardly isolate a single variable and experiment on it in the real world.

Economics is distinctly worse than fortune-telling! Fortune-tellers will generally agree on what to tell a chump, or at least converge on a few alternatives...economists seem far more likely to generate a minimum of one opinion per economist.

i think he is talking about his experience as a player, not economics.And you're still right about having multiple servers would allow for control groups and comparisons. Your statement and his are unrelated.

Personally, i DESPISE MMORPG economies and trade. It brings the plagues of gold farming, twinking and short cuts. One of the things i love about PlanetSide is that everyone can have the same stuff and abilities (maybe not all at once, but in general). That makes the game more about skill, tactics, c

Yes, macro-economics would still exist.No, it would not have any relevance to anything other than a fairy tale.

Governments control their economies. That's part of what they do. And right now, most of that is accomplished through managing the money and the banks.

Otherwise, the government would not have much in the way of revenue. Which is where this scenario fails. It's based upon individuals (or small groups) working to earn money themselves to accomplish their goals. With the only influence being other ind

No, it would not have any relevance to anything other than a fairy tale.

Well, at least, I see now where you come from. However, if you participate in this economy, then macroeconomic information is useful to you. For example, if it is known that there's an increase or decrease in the collective value of luxury goods sold, then that would be useful information for someone thinking of starting a luxury good business. If you're a large investment bank, then informati

No, it would not have any relevance to anything other than a fairy tale.

Some skeptics would say that it's a fairy tale anyway.

Governments control their economies.

No, with a few notable exceptions, governments excercise influence over economies. They do this through a whole host of factors, of which monetary policy is only one of many. And governments exercised control before there were central banks based on fiat currencies. The idea that macroeconomics, or it's validity, hinges on a central bank and government debt is absurd. It's not unlike saying the laws of physics depends on the existence of rocket ships (and please, no reference to the Copenhagen school). My point: the validty of macroeconomics doesn't depend on a central bank. Central banks use macroeconomics to plan policy, not the other way around (e.g., rocket ships use physics, physics isn't dependent on rocket ships).

Otherwise, the government would not have much in the way of revenue.

Again, this is nonsensical. Governments tax productivity. Income doesn't suddenly appear out of the quantum foam. Manipulation of credit markets and central banks allows them to spend beyond their ability to raise tax revenue, in much the same way that debasing currency did in the past (and why debasing / counterfeiting has been dealt with harshly...only the government is allowed to destroy the value of money or currency), but it does not remove the need for taxation.

...governments excercise influence over economies. They do this through a whole host of factors, of which monetary policy is only one of many.

And let's not forget that in most developed economies (the US included) the central bank acts independently of the government. In fact, it's not unusual for government wishes and monetary policy to be at odds. A number of elected representatives are currently pushing for the Fed to cut the policy rate
The government may wish to control monetary policy - the current

And let's not forget that in most developed economies (the US included) the central bank acts independently of the government. In fact, it's not unusual for government wishes and monetary policy to be at odds. A number of elected representatives are currently pushing for the Fed to cut the policy rate by 50bps or more, when arguably it's not yet clear that such a cut can be justified on monetary policy grounds alone. And on the flipside, expansionary fisca

The big idea is to start your own game community. Then you can print money too. (OK, Fed doesn't actually print but just updates database rows. The US Government prints. Fed gets fractional banking ponzi credits (10x) and again do their banking buddies (10x more).) So, a three-level ponzi scheme seems optimal. So, your game company prints money by making virtual assets (read "Second Life" and gold coin games) and then maybe you have some governing scheme (central "bank") and distributors (member banks/banks

True, but the body of macroeconomic work largely discusses economies that do exist, and have central banks. Macroeconomics as a field of study would still be relevant, but the body of work already done in it wouldn't.

Largely, they do behave the same, but most of this is on the micro scale. Macroeconomics includes things like monetary policy by definition, and most studies of monetary policy study how the policy works in the context of a central banking system. If we had a different monetary system all of that work would be irrelevant.

Sorry, while your observations may be true for other games, they are invalid for EVE. A point-by-point refutation:>MMO: "Game Owners Create Money and distribute it to players at a fixed rate"In Eve there are isk (the unit of currency) spigots. Bounties are paid to pilots for killing npc pirates, completing missions and/or selling items to NPCs. This money is create ab initio and is distributed at a rate determined by the players. Killing more pirates creates more money.

MMO: Game Owners Create money and distribute to players at a fixed rate.
Real Life: Federal Reserve creates money and distributes it by buying government debt which pays interest.

What do you mean fixed rate? ISK (EvE's currency) just doesn't appear in your eve-mail. You have several ways of earning, only one of which (killing NPC's) generates new money. And there are taxes on nearly every thing to make sure that the increase in new money is in scale with new players. But different trends can majorly effect the amount of NPCing that people do (eg mission rewards get nerfed or increased, difficulty gets changed).

MMO: Game Owners tax citizens in Non-MMO money
Real Life: Government taxes citizens in order to repay federal reserve and decrease inflation for goods and services that they need in their government function (otherwise they'd just borrow even more money from the fed).

Wrong, most MMO's have taxes and money sinks. EvE has a lot of them be

You have several ways of earning, only one of which (killing NPC's) generates new money.

Actually, collecting on insurance also generates new money (at least, that's my understanding of the current insurance system, which seems deliberately designed to be a significant money source in the game). PvP ship destruction is a resource sink but a money source for most players.

Not to dispute any your other arguments, but I did want to make sure that one more money source got mentioned.

PvP ship destruction is a resource sink but a money source for most players.

Actually, the premiums are around 1/4 or 1/5 of the insurance payout. The payout also does NOT scale completely with your ship's value. A raven which will cost you around 110M isk will cost around 30M to insure and pays out around 80M. So really all you're getting back for your 110M ship is 50M - half the ship value. Try seeing what a capital ship pays out - much less than what you paid for it.

You're thinking of insurance in terms of value to the player, not the economic event. Sure, the player has to use the isk (along with other isk) to secure a new ship, find new equipment, etc. But that isk never existed before. The isk spent on the destroyed ship is still in circulation.Now, clearly the insurance doesn't completely compensate the player for their loss of resources. That's what most players have to work against to keep playing.

The bit near the end about trading opportunities between regions was interesting. The rest wasn't that interesting due to the lack of context. We weren't given many details about what major changes occured that could have triggered the changes in mineral prices. In all, I didn't find it that helpful or engaging.

In the future, I think there's one area worthy of interest that this economist can cover. Namely, with the resources of CCP at his disposal, he can collect economic information that is difficult or impossible for players in the game to collect. For example, GDP of regions (there are somewhere around 50-60 regions in the Eve universe). Even a large network of players couldn't calculate that. What regions create economic value and what regions destroy it (in wars usually)? What regions generate the most insurance claims? That sort of thing. Look at the sort of economic figures a real country generates.

Many players spend all their time in a single type of region (eg, "high security" where killing other players is harshly punished versus "0.0" where anything goes). The economic differences between regions (market data like prices, volatility, volume, etc) can be figured out by players, but it's usually a lot of hard work (unless Eve's API helps out here, I don't know). In any case, tell us stuff we can't figure out easily for ourselves.

What regions create economic value and what regions destroy it (in wars usually)?

I think it's a safe bet that hisec generally has a positive GDP while 0.0 is probably lucrative for a select few (BoB? Goon Squad?) but generally negative overall. After all, how many corps move to 0.0 only to get wtfpwned after a few weeks, losing everything? Still, it would be nice to see it in writing with actual figures and graphs.

factors become more and more important as EVE Online grows and the market becomes more efficient.
That's really what the game stands on, the whole thing is tied together by the market system. We have various disconnected systems like mining, manufacturing, corporations, and combat, but they all tie in at the bottom with the market system. We initially spent a lot of time when the game was first made, making sure that we had an abstract, efficient, accurate market system. We made many difficult decisions where we sacrificed 'correctness' for simplicity or ease of use. It is a fairly complex thing, but it has allowed us to evolve the game quite rapidly up to this point. That said, we have been seeing more and more of a need to get professional insight into what is happening on the macro level. We've seen immediately how responsive the player base is to it. They've been looking for these kinds of insights for some time now.

So his simulation is based on the presumption that everything is "market-based" and "tied together by markets". Since he can learn from his model only insofar as it is accurate, and since the Real World has other factors..... why should we care about this?

Say we get a whole generation of SimuloEconomists into decision-making positions. And then we have any of:

Natural distaster

Social Upheaval

Technological Breakthrough

War

... then doesn't this approach get completely blind-sided? What kind of us

So his simulation is based on the presumption that everything is "market-based" and "tied together by markets". Since he can learn from his model only insofar as it is accurate, and since the Real World has other factors..... why should we care about this?

Because it's how our own system started, even many thousands of years ago. If you can create a pure economic system without the other factors added in yet, you can use it as a base model to see what REALLY causes certain outcomes in the real world. I

You are, effectively, immortal. You can keep coming back. That changes the economics. Instead of a single run (life), you can have multiple runs. Without the tedious childhood and learning parts.

But death has a real cost. You lose your ship, your equipment on the ship (typically worth several times the value of the ship itself) you may lose your investment in yourself if your "escape pod" gets destroyed. So while you're immortal, the losses can be very big.

No, you are not immortal. You can insure your ship but not the equipment you buy to your ship (which usually are much more valuable than your ship). You can get killed: You'll lose your head implants, which are not cheap. Even if you have the money to buy new ones, you need to fly around the galaxy to find the replace parts (which takes time). Yes, you will be reborn to a new body (clone) and retain the skills you have learned, but if you run out of your clone, you will lose your skills (yes, that could hap

First: all models are wrong, some are useful.Second: About the only item that Eve doesn't have on that list is "natural disaster." Social Upheaval? Alliances falling apart. Technological Breakthrough? Release of new tech (e.g., not that long ago when rigs or thermodynamics came out). War? A fundamental factor in Eve.

Sure, its not a perfect "true-to-life" model, but I can see why an economist--most economists focusing on theory instead of application or simulation anyways--would be thrilled at the prospec

Well, one thing that CCP (the guys making EVE) have been ever-so-slowly grinding towards is a good and proper war. No, not an alliance vs. alliance or corporation vs. corporation, but actual in-game Government vs. Government warfare. Of course, this is something that's been promised for over a year, but it will eventually come.
As far as social upheaval, give CCP enough time... We may yet see that and more...

Those criticising the analysis of the EVE economy on the basis that it's not a 'real' representation of a 'real' economy miss the point that, in this respect, EVE is no different from any other economic model. That is, all economic models are abstractions from reality, by definition, whether they be econometric, general equilibrium, game theoretical, or whatever. As somebody has pointed out, that doesn't render them - or EVE - useless as an analytical tool.

As he's Icelandic, it's probably more proper to call him Dr. Eyjólfur. In Iceland, they still have the Scandinavian tradition of having your last name be that of your father. So my children in Iceland would have last names Marksson and my sister Marksdóttir. Thus it is not a family name in the same sense as usual European last names are family names. In fact, Icelandic phone books list people by their first name, then last name.

Several games have run into severe problems with the internal economy. One early MMORPG had resources which could be mined and converted into items. Abandoned items deteriorated into basic resources. This was envisioned as a closed system with a fixed set of resources. But it broke down when people kept making stuff and hoarding it, resulting in resource exhaustion and runaway inflation.

Another game ran into trouble when NPCs authorized to trade offered prices that allowed arbitrage. Players exploited this by buying from one NPC and selling to another elsewhere. Because the NPCs could create resources, this resulted in a huge increase in M1.

Then there's the relationship with the real world economy. What are the gold farmers doing, and how much are players paying them? Can players still play effectively without dealing with gold farmers?

These issues drive players away, so it's a real issue in game operations.

The article didn't say much about these kinds of issues. Either their economist is clueless or doesn't want to talk about such things. It's surprising to see an article about EvE's economy that doesn't mention gold farming.

Many of the issues you are talking about are not mentioned in the article because they were solved in Eve well before the person interviewed came on board. Which was pretty recently. As a player who has been around longer, I will address some of your Examples:

Not a closed system on minerals. Asteroid belts respawn, so with player time and effort, more minerals are created. When ships are destroyed, resources are destroyed, so there is a sink as well. I could go into more detail, but it would be at great length, and anyway his first Blog was about the initial steps of looking at mineral pricing.

NPC trade- There is a limited amount of NPC arbitrage available. NPC prices adjust with buys and sells however, and over time (generally at downtime) go back toward where they started. Thus, there is some money to be made there, but the more people who try to do it, and the more frequently, the less to be made, leading to a relatively harmless PVE sideline.

Gold farmers: They are annoying. People blow them up when possible. They are unnecessary for effective play. CCP's most effective step against them was the controversial decision to allow people to buy game time with ingame money and provide a secure system for these transactions- this undercut the gold farmer prices, and the gold farmers have more trouble nowadays converting resources. This is actually a matter which will be interesting for him to explore in the future, but again he's done one blog so far.

Basically, what your objections boil down to appears to be "An online economy can't work. Why isn't he talking about why it isn't working?". Yet it is working, unlike in most other games that use a lot more central management of the economy. So he's intersted in talking about what is happening in the economy, not why other games don't work.

"Yet it is working, unlike in most other games that use a lot more central management of the economy. So he's intersted in talking about what is happening in the economy, not why other games don't work."While the economy may be working, there are other things that need to be measured. i.e. how much fun are the players in the economy having? Like "Gross national happyness"? Economics is intimately linked with how people feel and percieve the world in the real world.

Well, there are two attitudes toward the game (and this is a simplification, but probably useful here). One is that the cool thing in the game is the PVP with real consequences ingame. The other is the cool economy. The PVP focused people gripe a bit about the economy, but the pain of economic loss is one of the things that gives the PVP spice, so when they are not so drunk they realize it's importance, but still look down on the second group. For them, the economy is only the means to an end, whether the e

Well gold farmers have a hard time in EvE:1. They are preyed upon by other players, as soon as a gold farming operation is noticed, poeple will flock and steal from them until they have to flee.2. Their services aren't needed: you can buy isk if you want, by buying timecards from CCP and selling them for isk to players that make enough in game so they can pay their game time in isk. This is accoeted by CCP.

I don't think you've even played EVE, and that said, you need to play it to understand that this isn't just some regular MMO economy. It's not like the economy on WoW which is different server to server but largely predictable, especially with certain plugins to track some transactions during the day.

EVE has a very, very different player economy. It is almost entirely player driven. No NPCs to sell to, no standard items that you get for "questing".

The big reasons that EVE's economy is the best working economy that I've seen so far:

1) Location matters. There's no magical transportation of goods like there is in WoW or EQ2. As a result, goods acquire value by moving closer to the buyer. That keeps the market from becoming "flat" where everyone charges the exact same price regardless of location. It also allows younger players to participate by buying low-priced goods in one system and moving them elsewhere where people are willing to pay more.

After reading the report it is surprising that this would be interesting to someone who specialized in economics. In fact EVE's single universe is what contributes to the simplicity of their market. The report makes a great deal of todo about the information spreading extremely rapidly and causing price effect changes over the vast universe in near synergy... uh duh? It's a game universe with instant communications that has very little barriers to trading across loyalities or "factions". EVE's market is simple and the macro report provided backs this up easily.

As bad as the typical WoW market is, it's much more interesting. There are two factions who have limited ability to share things between each other without extra cost and time investment. In addition these faction markets are often vastly different in size/resources so one has a huge trade advantage (think US/China). The markets have "peaks" that are broken with major patches or content, think of them as a revolutionary tech or invention that shatters current markets (50 new points of skills or what have you == automobile/electricity). Each server can have a very distinct economy somewhat based on the overall player progression and server creation date (intelligence/connectedness of the average player). Finally many servers have economies that are driven largely by two or three individuals... while some are missing these power players. The vast difference in each server's economy seems to me, like it would be much more interesting and have much more information/knowledge to impart.

Having played both, and in fact WOW much more than EVE, I will say that WOW's market has nothing on EVE's. As stated in the article EVE's PVP results in the destruction of items, which gives crafting and finding new items some point - where in most mature WOW servers you'll find 90+% of the items that can drop find themselves recycled via enchanting into essences/dusts, or sold to a vendor for raw currency. In addtion, EVE puts a lot more focus on WHERE a commodity is. In WOW, a shared auction house func

EVE's PVP results in the destruction of items, which gives crafting and finding new items some point - where in most mature WOW servers you'll find 90+% of the items that can drop find themselves recycled via enchanting into essences/dusts, or sold to a vendor for raw currency.

Exactly. Which system results in the removal of resources more? One where people have to be willing to risk their own hard fought resources, or one where if something is of no use to the owner is destroyed or sold for a trivial amount

Having played both WoW and EVE, I can say with 100% certainty that you're full of shit.> uh duh? It's a game universe with instant communications that has very little barriers to trading across loyalities or "factions".

Are you high? You DO NOT SHARE INFORMATION outside of your own corp or alliance. Sometimes you don't even share it with them, because it can kill your profits. I don't know where you get your idea that there are no trading barriers either - the game is one enormous trading barrier.

Having played both WoW and EVE, I can say with 100% certainty that you're full of shit.

Having played both, and many other online games, I can say with 100% certainty that you're the reason I avoid such games.

Any MMORPG has a meta-game, it's which one appeals to you. Obviously EVE's appeals to you, probably it's your need and desire to be combative and ignore viewpoints which don't mirror your own exactly by attacking the person, rather than simply expressing which you disagree with. A game where it is respe

There are 2 markets in WoW. There is a market in every station in every solar system in EVE, and where you decide to sell will make or break you. I can make millions off buying cheap skills from a nearby university, transporting them 4 jumps to a trade or mission-running hub, and marking them up 1000%. People will buy them just to avoid spending time on the 8 jump round trip because shit does not magically end up in your mailbox.

"[the eve game universe] has very little barriers to trading across loyalities or "factions"."

I assume you are just ignorant to the fact that much of space is off limits to most would be traders specifically because of different "factions" and there Kill On Site or NBSI (not blue shoot it), policies. There is plenty of money to be made getting into an alliance and doing supply runs from empire. People will gladly, or (begrudgingly depending on markup), pay for these services. There are also social barriers

There are substantial upheavals that occur in the EVE universe, when (as in WOW) new technologies and items are introduced. Older technology bombs out in price, new hardware sells like hotcakes and for a whole set of limbs. As well, as new methods are introduced to manufacture items, prices also substantially adjust as well.The best example of the latter was the introduction of Invention. Previously, Tech 2 items were only available at exorbitant prices due to A) the rarity of blueprints used to produce the

"All of these components are build into the world, and when you make decisions in the game you're making many of the same decisions you make in your daily life."

..Except you're too busy playing the game all day to make any real life decisions.

But joking aside, if playing the same was actually LINKED to "soft" products in the real-world economy (e.g. buying/selling shares) and profit/loss from these reflected in online gold etc as well as your real bank account, we may get more kids interested in partic